Interest rates are falling – but not borrowing rates

Households handled their money wisely in the first quarter of 2019. Savings balances have increased – despite the extremely low savings interest rates – and consumer loans have also been repaid. This is evident from figures published by Statistics Netherlands.

Lower debts

Statistics from Statistics Netherlands show that household debt decreased in the past quarter for the first time since 2016. This specifically concerns consumer loans and other long-term loans.

If we look at mortgages, it appears that the amount of residential mortgages has increased in the past quarter. But less quickly than in recent quarters.

Lower interest rates, higher loan interest rates

Interest rates have been falling sharply lately. The graph below shows the development of the capital market interest rate (10-year government loan), the savings interest (highest interest savings accounts without conditions) and the mortgage interest rate (lowest interest 10-year annuities with National Mortgage Guarantee) in the last year.

It is clear that all interest rates – especially in recent months – have declined. Unfortunately, this does not apply to borrow rates. The graph below shows the lowest borrowing rates in the last 10 years (lowest revolving interest rate and personal loan). It is striking that the interest on the personal loan has remained the same in the last year and that the interest on the revolving credit has even increased.

If we look a little further at the development of borrowing rates, we see that most lenders have recently been raising interest rates. So completely against the general interest rate trend. The question is whether people who want to apply for a loan will also benefit from the general fall in interest rates that we have seen in the near future.

Many loans can be cheaper

That does not mean that it is not interesting to see whether you can save on your loan. The vast majority of the loans still run at interest rates that are much higher than the minimum interest rate that is currently possible in the market. We, therefore, advise you to take your own loan (s) and see which interest rates are currently possible. Who knows, you can realize a nice saving!

In recent years, you have heard a lot about loans over the internet, without certificates or even loans for free. On the one hand, taking advantage of such an offer, where we receive money practically without waiting is very desirable, and on the other, you can start to fear where the catch is.

It can be clearly said that both banks and loan companies borrow money to make money on it. There are no hooks here. However, the difference in chances between getting a loan from a bank and loans on a parabank can be huge. Usually it is people who banks refuse loans to check non-bank loan offers.

What are non-bank loans?

Parabanks are loan companies, i.e. companies whose main purpose is to borrow money. Such companies operate legally, and the process of borrowing money is based on civil law. The provisions governing the granting of loans can be found in articles 720 to 724 of the Civil Code. On the other hand, parabanks themselves operate on the basis of regulations regarding conducting business activity, although they are most often established in the form of companies.

Their main services are loans. A non-bank loan can have many types. The most popular are cash loans, including online loans to a bank account , but you can also take out a mortgage or mortgage loan. In addition, we divide loans into short-term and long-term – repayment period of over 12 months.

The repayment method can also be different

Quick loans, also known as payday loans, have to be repaid within 30-60 days at one time, while installment loans can be taken out, which is repaid as a bank loan, i.e. by paying monthly installments. Currently, almost every company offers the possibility of taking loans online . This is a very convenient solution that some banks also use.

Just instead of going to the company’s headquarters in person, simply visit its official website. The field for selecting the loan amount and repayment length will be displayed, when we complete it, we can proceed to filling in the application. Just complete it with your personal and financial details to proceed. Personal data verification is done by sending a small amount transfer to the parabank. If the data match and the income entered in the application is sufficient, we will get a positive response and the loan will be paid to the bank account indicated. It is repaid by transfer to the parabank account.

Loans without certificates

Each company advertises its products as the best and the cheapest. The hit, however, is an online loan without certificates . Does this mean that everyone will get it? Not necessarily. Banks have different procedures and each customer must bring a document confirming the income, the so-called income certificate, and is checked in BIK and BR to check its creditworthiness. The online loan is granted with a minimum of formalities, which is why instead of sending the certificate, the customer must voluntarily complete the income statement, which is part of the loan application. It is not possible to send an application without completing this section.

The certificate is a formal document, therefore the attempt to fake it is classified as an attempt to extort a loan. The same is true with an income statement. Although we fill them in ourselves, we must stick to the facts, and it’s best to write down all the information from your employment contract or other document. An intentional increase in income or reduction of costs will also be considered an attempt to extort a loan. Therefore, parabanks offer customers the option of entering their income themselves, because the legal obligation is to provide true values.

Loans without BIK

Fast loans over the internet are very popular because parabanks have little formalities. But this does not mean that every person will get a loan. Even an online loan requires a customer check. Verification of personal data by making a transfer and receiving an income statement is not all that a parabank checks. Many loans advertisements include the term “loan without BIK”. In fact, only banks need to check BIK.

BIK, or Credit Information Bureau, contains information about previous and current loans and non-bank liabilities. So you can check if someone regularly repays their obligations. However, it is worth knowing that there are other databases, such as BIG InfoMonitor.

This database contains data on loans like BIK, but also data on debts from the National Debt Register. Therefore, it is a much better source of information than BIK itself. And this base is checked by most parabanks. So if we have negative entries caused by debts, even the lack of certificates will not help us get a loan.

In addition, if we do not pay it back on time, it will be entered in the debtors database. And this will make it difficult for us to take another loan or prevent us from taking a loan. In addition, it is worth thinking carefully about whether we need a loan or whether it is for such a high amount. Loan companies offer the possibility of extending the repayment time, but it is payable. Payday loans especially can get us into financial trouble because they have a very short repayment time, which means that many people take another payday loan to pay off the previous one. In this way, you fall into a debt loop from which there is no way out.

Debt consolidation payday loans can be a good thing for the people who find themselves in need of quick money. With a few lines of credit, you will be able to make ends meet, and even pay your bills, without having to go into debt again.

What is the catch with debt consolidation?

It is no secret that many people are going to financial trouble, and there will be many people looking for loans. Credit cards are very helpful for many, but often times people are overspending and will find themselves over their heads with debt. There are many other ways to get the cash you need, but you should always be cautious about where you get your loan money from.

It is best that you find an alternative to credit card companies, as they tend to charge outrageous fees for their services. While they might seem trustworthy, some people have found that credit card companies are not reputable, and that is why they may charge very high interest rates.

Credit cards are great for getting things that you want, but if you want to use them to get out of debt, you might want to think twice. When you feel a little behind on your payments, a bill might pop up on your screen that has a charge for three months of services, and if you cannot make the payment at that time, it could push you further into debt.

This is why debt consolidation payday loans are a good alternative. You can use these loans to solve your problems and do whatever you need to do to make your monthly bills look better.

Is it better to get a debt consolidation?

Debt consolidation payday loans can be a good thing if you know how to use them properly. There are several tips that you should know about, before you even apply for the loan.

First, the most important thing is to realize that when you get a loan, it could take sometime before you see the money. Many people think that they will get it right away, but they do not realize that the money might take a while to come.

If you are able to wait a while, you will find that you have more money in your checking account. This will help you to make your debt look a lot less severe and also helps you to understand why you have gone into debt in the first place.

Instead of just leaving your check in the bank, or paying the money on your credit card bills, take some time and put your check in your savings account. When the money does come, you will realize that it is not the same as what you might get when you simply loan it to the bank.

What factors you should remember?

One thing that you should always remember when you need a loan, is that you should not spend it all at once. If you have a check from a pay check, you should pay off that check and save it for a larger payment.

On the other hand, if you get a debt consolidation loan from the bank, take a look at what you are spending money on, and only get what you can afford. If you need a larger amount and need to spend it all, be sure that you understand what you are spending, and save that money for a rainy day.

Debt consolidation payday loans can be a great thing to help with your finances, but you must be careful about where you get your money from. Learn how to use your loan wisely, and you will see that it is not a bad thing at all.

The mortgage works like a conventional loan. First, it is accessible for both an individual and a professional, provided you own at least one property. This type of loan is useful for financing new projects or new purchases.

Also, it can be used to repay an existing loan. That said, mortgage credit can be granted for a mortgage, a consumer loan, a personal loan, a car loan or even a loan repurchase.

The procedures to be followed to be eligible for a mortgage

The terms of the mortgage loan are very similar to those of a conventional loan. Thus, it is possible for the borrower to make all the prepayment. He can also adjust the monthly payments according to his possibilities. However, the mortgage rate can be variable or fixed.

For example, in the event of sale of the mortgaged property, the credit may be settled in advance. But you should know that it is also possible to make a substitution mortgage on another property.

Points on the duration and amount of the mortgage

The term of a mortgage can be short or long term. It is determined according to the applicant’s debt ratio. Indeed, this rate calculation must take into account the income of the applicant in relation to his expenses.

In principle, the duration of a mortgage loan is longer than a conventional loan. This is established mainly between 20 and 25 years. Speaking of the duration of the credit, the only restriction is that the last monthly payment must take place before the 90 years of the borrower.

Regarding the amount of the mortgage, this is calculated according to the value of the mortgaged property. The latter is generally determined by real estate appraisal. Once the value of the mortgaged property has been determined, the amount of the credit is established between 50 and 80% of the net worth.

The different reasons for using a mortgage

For a mortgage loan reserved for professional purposes, it essentially contributes to the financing of a working capital requirement. This credit also makes it possible to develop a new patent and at the same time finance the distribution of an original product.

The mortgage loan can also be used to acquire shares while carrying out a capital increase. Thus, the applicant will have the opportunity to acquire commercial premises or a business.

Finally, you should know that the mortgage also allows you to settle certain unforeseen tax or social charges. For individuals, this type of loan gives them the opportunity to give a boost to their children or other. The use of a mortgage loan in a personal context therefore concerns the following elements:

financing a cash payment in a divorce or an estate to avoid selling personal property.

The terms “non-bank loan” and “bank loan” are often used interchangeably. Meanwhile, the list of differences between them is very long. Do you need additional funds and wonder which product to apply for? We have prepared a guide in which we explain the differences between non-bank loans and bank loans.

Internet loans and credit – legal regulations

On the formal side, the difference between loans and bank loans comes down to legal regulations. Internet loans offered by loan companies are granted on the basis of the Civil Code. The granting of payday loans and non-bank loans is also regulated by the Consumer Credit Act and the Act on Financial Market Supervision and certain other acts (the so-called anti-usury act).

Banks operate on the basis of the Banking Act , according to which the granting of loans is an activity reserved exclusively for them and credit unions. The banks’ offers include various loans, including: cash, mortgage and consolidation loans.

/ “By the loan agreement, the lender undertakes to transfer to the person taking the property a certain amount of money or items marked only as to the species, and the recipient undertakes to return the same amount of money or the same amount of items of the same grade and quality.” / _________ – Article 720 § 1 Civil Code

/ “By the loan agreement, the bank undertakes to make available to the borrower for the period of time specified in the agreement the amount of cash for the specified purpose, and the borrower undertakes to use it under the conditions set out in the agreement, return the amount of the loan used together with interest on the specified dates repayment and payment of commission on the loan granted. “/ _________ – Art. 69 § 1 Banking Law

Who grants loans and who grants loans?

A non-bank loan is a characteristic product of loan companies. Contemporary lenders on the Polish market offer both online loans in 15 minutes (often referred to as “payday loans”) and online loans in installments. Characteristic for the latter is that the client gives money not once, but in monthly installments. However, anyone who has capital can take out loans – it can be both a company operating as a company or an individual.

While everyone can offer online installment loans, the case is different with loans. Only banks are authorized to grant them. In addition, loans are granted under strict conditions which have been specified in the Banking Act.

Form of the loan and credit agreement

Online loans in 15 minutes offered by loan companies are granted online. As a rule, the lender does not have to write a contract with the client, provided that the subject of the loan is up to USD 500. In other cases, a contract must be drawn up. Its content should indicate both the costs and the repayment date.

The loan agreement must be in writing. The Banking Act (Article 69 paragraph 2) contains detailed information on what elements should be included in the loan agreement. In particular, it must specify: the parties to the contract, the amount and currency of the loan, the purpose for which the funds will be allocated, as well as the amount of costs and the repayment date.

Online loan and credit – costs

The difference between loans and credits is also visible in the costs incurred by the customer using these products. Loans can be granted free of charge. Loan companies are very eager to use this option. An online loan for USD 0 is a form of promotion addressed to new clients.

Still other loan companies, such as the Right company, are introducing a symbolic fee – customers taking loans online in the amount of USD 1,500 for 60 days must expect a fee of USD 10 (APR 4.12%). Some lending companies offer online loans in installments , i.e. loans whose repayment – as the name suggests – takes place in monthly installments. The above-mentioned Right company offers its clients USD 20,000 for a maximum period of 60 months.

Taking a loan always involves additional costs for the client. This is clearly seen in the example. By borrowing USD 20,000 for a period of 36 months, the client will pay USD 664.74 per month. The total cost of the loan will be USD 23,930.64. It consists of an interest rate of 4.4 percent. and commission for granting a loan in the amount of USD 2,380.00.